Bill Tieleman is one of BC's best known communicators, political commentators and strategists.
Bill writes a politics column Tuesdays in 24 Hours newspaper and The Tyee online magazine.
Bill has been Communications Director in the B.C. Premier's Office and at the BC Federation of Labour.
Bill owns West Star Communications, a consulting firm providing strategy and communication services for labour, business, non-profits and government.

Tuesday, January 22, 2013

BC Government Bailouts for BC Film Industry? Cut! The Never Ending Call For More Money From Hollywood

If
there's one thing that both BC Liberals and New Democrats can agree on it's
this: giving money to Hollywood is almost irresistible!

So
if you want to get literally hundreds of millions of tax dollars to subsidize
your already highly profitable $1.2 billion
industry, just send a few movie stars and producers up to British
Columbia, smile sweetly about how you love the place and then threaten to
leave.

Works
every time.

And
when over 1,000 rightly worried film and television workers meet tonight at
North Shore Studios for a Save BC Film information session
that will get blanket media coverage, and an online petition
hits 25,000 signatures, watch the pressure build on both parties to outbid each
other with your money.

But
things don't change when it come to film moguls milking the government like a
prize dairy cow while promising to make politicians look like stars.

Adventures
in Hollywood

In
1998 I went on a "fact finding" mission to Hollywood representing
labour, along with a B.C. government deputy minister and film industry
representative.

The
trip was needed because Ontario had just introduced an 11 per cent tax
credit on labour used in film and television production -- excluding
foreign actors and crew -- and B.C. was under pressure to match it or the
industry would die hard with a vengeance.

We
spent two days meeting movie executives and in one producer's office was a big
sign at his desk that epitomizes the whole situation: "Free is too
much!"

The
penny -- and a several million dollars -- dropped for me then.

The
same producer said his firm would shift a $2 million television movie of the
week from Vancouver studios to Toronto if it could save just $10,000 in total
from Ontario tax credits.

"Seriously?"
we asked incredulously. "Even with more experienced crews, the time zone
difference, better weather, the extra distance from Hollywood, the variety of
locations and sets?"

"Yes,"
was the straight answer back.

And
it may be true.

Scripting
a bidding war

B.C.
paid up then even when the dollar hit as low as 63 cents U.S.
and kept jacking the tax credit
from 11 per cent to an astonishing 33 per cent today
on all local labour costs, plus additional credits for shooting outside
Vancouver, spending around $285 million a year to keep up to 25,000 jobs here.
Currently the industry says the unemployment rate is about 90 per cent.

But
Hollywood has a good script and we now see the results of Ontario and Quebec
starting a shameless bidding war for film industry jobs and investments with an
incredibly generous tax credit hike to 25 per cent of
total costs that puts B.C. 10 per cent to 13 per cent behind them.

Better
investments

Just
think for a minute about that -- would the restaurant or forest products or
construction industry like to get a one-third tax credit on all its labour
costs?

A
tax credit that really means you get all tax paid back and then a cheque from
the government for the remaining value of that cost?

You
bet! Would they invest that money in B.C. to create more jobs? Sure!

Would
spending $300 million a year building 1,000 or more units of housing for the
homeless create lots of great jobs and put a needed roof over people's heads
too? You bet!

But unlike
the film business, other sectors can't easily get up and leave town.

Movie
and TV shoots, unfortunately can and do.

And
they're not shy about making that clear.

Movie
production manager Warren Carr
made it clear in an interview with CKNW radio's Sean Leslie on Sunday.

"Yes,
we need a little help on the tax credit," said Carr, who helped produce
The Bourne Legacy and Diary Of A Wimpy Kid.

The
movie moguls were also big fans of B.C.'s outgoing Harmonized Sales Tax, which
also put more money in their pockets at consumers' expense, advocating strongly
for it in 2011's binding referendum when I was strategist for Fight HST, the
group that successfully opposed the tax.

"Vancouver's
ability to remain a competitive film market relies heavily on the support of
the provincial government and their enthusiasm for maintaining an attractive
taxation scheme.

"With
a strong Canadian dollar, this is the only way to ensure and build upon the
long-term success that has been established."

Fair
enough from the film industry perspective -- and no one wants to see workers
unemployed -- but the rest of us may not agree that ever-rising levels of tax
rebates from the public coffers are a good way to save jobs.

Let's
direct our own fate

No
matter what B.C. does, other jurisdictions in Canada, the U.S. and elsewhere
have engaged in an unlimited bidding war for Hollywood's favour, with tax
credits as high as 35 per cent
in Louisiana.

So
what's the solution if throwing more money at Hollywood isn't?

There
has to be a sustainable plan for B.C.'s film and television industry; one that
isn't completely dependent on massive tax credits or a depressed Canadian
dollar to survive and grow.

But
it won't be developed in the heat of a panic campaign or with advice from
self-serving movie moguls.

And
Hollywood's love of whip-sawing province against province, as well as American
states and foreign countries, for the biggest, fattest tax credits imaginable
has to hit the cutting room floor at last.

Premier
Christy Clark and her government have done a pretty miserable job with the
industry, considering how much money they spend on it, alienating both workers
and bosses with their indifference to what really is a very difficult situation
of high unemployment and fewer productions in B.C.

But
both parties would be smart not to jump when Hollywood yells: "Action!
Throw us big bucks and make it look sincere!"

With a
sensible strategy, B.C.'s film and television business won't fade to black and
the hit movie "Tax Credit Bandits" won't keep producing expensive
sequels.

If the film industry is again successful in bumping up the subsidies, the producers will be telling Ontario and Quebec the same thing. Then, they'll be back for even more from us after the eastern provinces cave.

Then, we can expect the Aquilini's demanding higher subsidies for the Canucks, or they'll move to Seattle, or Halifax, or Moose Pasture, SK.

It's not Hollywood yelling for money - they just quietly go elsewhere. It is us, the sad and unemployed. We don't want to move out East, we would like to stay in our homes but if you insist, we can go.

Rarely do I say this, but I agree with you completely Bill. Film and Television should not have any more tax credits than any other business. Picking and choosing what industry to subsidize is a dumb idea.

Why should be expect a waitress in Hazelton or a social worker in Cranbrook to pay more in taxes to attract the film industry?

It is my impression that the Vancouver film biz enjoyed a brief moment of attention/flourish/profit when the Canadian dollar was low in comparison to the US dollar. So many BC'ers I know, young and old, looked to this industry as their future and now it seems it is going...gone...in a race to the bottom and a competition with other provinces to hang on to what they have and likely will soon lose.

Canada needs sustainable economic endeavours and can't make itself beholden to world capitalists who will hold it to ransom.

It is sad that the Lieberals have no more cash for the Canadian film industry, but they have bucketloads of borrowed money for foreign films and propagamda adverts.As a small time investor, I would still try to keep Canadian films here as long as there is a positive return on the investment. Unfortunately with minimum wage background jobs, there can be no income tax paid. I guess the poster above might be correct in that it is time to stop the race to the bottom. Government should really step away from private enterprise, especially with a $60 B. debtload. After all, when this government trys it's hand, you know there's a disaster down the road.

Before you comment on a subject whose process you are not properly informed on and for anyone interested in finding out how the film tax credits actually work and their economic impact in BC, please spend a few minutes and check out this easy to read report. We contribute a great deal to this province and there are a lot of misconceptions out there as to how it all works. I hope this helps you make a more informed decision.

Forestry, mining, oil and gas industries all get provincial tax credits as well. Why? To keep us competitive in the global market and keep people employed here in BC so they can pay taxes back into the system and spending their money in the economy. This spending helps pay the wages of someone else and they pay taxes and their wages go to paying the wages of someone else who pays taxes....etc etc...

Wow....sorry to say Bill, you should get your facts straight before you speak in regards to the Film Industry and TAX CREDITS, NOT SUBSIDIES! And I suppose you feel it's ok for our Premier to have invested millions in Bollywood this week?!?! Readers...Before you comment on a subject whose process you are not properly informed on and for anyone interested in finding out how the film tax credits actually work and their economic impact in BC, please spend a few minutes and check out this easy to read report. We contribute a great deal to this province and there are a lot of misconceptions out there as to how it all works. I hope this helps you make a more informed decision.

Forestry, mining, oil and gas industries all get provincial tax credits as well. Why? To keep us competitive in the global market and keep people more than 25,000 people employed here in BC so they can pay taxes back into the system and spend their money in BC's economy. This spending helps pay the wages of someone else and they pay taxes and their wages go to paying the wages of someone else who pays taxes....etc etc...

I love how people keeping saying the film industry wants money. We are not asking for the government to write a cheque...we are asking for tax credit. If there is no more industry here then they and we the people of this province lose billions period. Ever production that is made here supports ton of local buisness including all the lumber purchased to build sets. Everyone will feel the loss of this amazing industry.

The BC Tax Credit is a fully refundable one, this means if it is more than the taxes owed, the government sends you a cheque

How the PSTC WorksThe PSTC is a refundable corporate income tax credit. When filing tax returns, production corporations may claim a specified percentage of the labour costs incurred in making film, television, digital animation or visual effects productions. The credits are applied to reduce tax payable, and

Characterizing a tax credit as a "Bail out" is very misleading.I think we should also remember that if you create jobs for Britsh Columbians, they pay taxes. It seems to me increased tax credits will mean less tax revenue from film producers, but more tax paying workers. No increased tax credits means productions go elsewhere and you lose ALL the tax revenue from the producers and the tax revenue for the people that would have worked on the production.

Clearly, you don't get the difference between an outright subsidy (i.e. bailout or handout) vs. tax credit. The film industry is requesting better tax credits, not a handout. What this means, in plain English is: A film production company comes in, produces a major multi-million dollar film, hires tons of local people, has to pay to build sets, (carpenters are employed, basic labourers, local restaurants and cafes are used, etc etc.). At the end of spending their millions -- note, at the end, once the money has been spent here -- they then file for a tax rebate on the amount they paid.

The province still profits millions (and on a large scale billions) even with the rebate. Tax credits/rebates are used in many industries. Even outright subsidies are! (and again, they are not asking for this) -- Oil, forestry, etc. The film industry employs over 25 000 people directly and indirectly with "spin off" jobs, closer to 70 000 more. Billions are injected into the economy -- and, it's all clean and green, too.

Thinking of the industry as a bunch of rich actors or hollywood moguls is babyish and ignorant. The vast majority of the industry is comprised of regular men and women just like you, who work hard jobs as labourers, set designers, set construction workers, lighting workers, grips, technicians, etc. etc. etc. They have families, kids in schools, give to charity etc. -- in other words, have livelihoods they cannot simply pack up and move.

It is criminal to sit back (and scoff), watching such a successful industry crash and burn so quickly, simply because the province does not want to adapt with current times and adjust their policies accordingly -- which, again, will *not* cost the province. Again, doing so will only benefit the province, and result in a profit of billions into the economy as well as employment for thousands and thousands of its residents.

The film industry is not asking for subsidies. we're asking for incentives to be increased slightly. there is a HUGE difference. there is no cost to taxpayers with incentives. the media is trying to make it look like we're asking for a handout. We are not asking for subsidies. This LIE is being repeated in order to upset the general public and sensationalize the story. Film tax incentives actually result in a profit to the tax payer. and jobs. and business. that's what the government claims to support. we're offering them an opportunity to do that, at no cost to taxpayers.

Take the oil pipeline proposal, the BC government expects to bring just over $1 billion into the economy in 17 years with that project. The film industry brings in that much EVERY YEAR, at no net cost to the taxpayer. That's the story people need to know.

Mr. Bill, we are not asking for a "BAILOUT". We are not asking to be "SUBSIDIZED". We are asking for a level playing field with the rest of the provinces in Canada offering tax credits far in excess of what this Province and current government are offering.We are not looking for a hand out, we are asking that people who come here and SPENDING production dollars here get the same discount/tax breaks that are offered in other provinces in Canada.

"I suppose you feel it's ok for our Premier to have invested millions in Bollywood this week?!?!"No where in the article does it say that Mr.T supports government money for Bollywood. Where do you get this belief? Please ask before you assume.I personally believe that government has no business giving tax incentives to a select few. It should be all or nothing for everyone. Doing it piecemeal, pitting government after government, promotes the race to the bottom. "Amazing industry?" Being a former backgrounder, I did find it quite interesting, but as far as pay, it was a joke. Plus it was known that many working there were substance abusers. Right now this province is running a massive debt load. I think the government of the day should be more concerned about debt reduction and stay out of private enterprise. BTW, I am in no way a Clark supporter.

Forestry, mining, oil and gas industries all get provincial tax credits as well, and if this government wants to help the economy, and the debt, keeping people employed at NO COST to the tax taxpayers is a good way to do that. ONCE AGAIN. I REPEAT: film tax incentives result in NET TAX GAINS, which is precisely what we need in this tight economy. Also, less unemployment, and more provincial and federal tax revenue are a direct result of film tax incentives.

There is a difference between a refundable tax credit and a non refundable tax credit. The BC film industry has a refundable tax credit which means if they have tax credits worth more than their taxes they get a check from the government for the remainder.

The tax credits the industry gets is more than all the taxes paid by all the BC people that work for the companies getting tax credits.

The annual cost of the tax credits is $265 million, or more than $70,000 per BC person employed full time in the film industry.

Thanks for the spirited debate here and on The Tyee - a few points need to be made:

First - taxpayers DO underwrite the BC film industry. For those who didn't check the link, please read this from BC Film & Media:

"The Production Services Tax Credit (PSTC)

How the PSTC Works

The PSTC is a refundable corporate income tax credit.

When filing tax returns, production corporations may claim a specified percentage of the labour costs incurred in making film, television, digital animation or visual effects productions.

The credits are applied to reduce tax payable, and any remaining balance is paid to the corporation.

There is no limit on the PSTC that may be claimed on a particular production and there is no limit that a corporation or group of corporations can claim."

So as I wrote, taxpayers give film corporations 1/3 of their labour costs - period. The BC government writes them cheques.

Is it worth giving that amount of money to keep jobs in BC? That's the question we need to answer.

I am very sympathetic to film industry workers - they didn't create this situation and they don't control it.

But to claim that the tax credit isn't a subsidy is absurd.

And to claim it is sustainable to pay 1/3 of the labour costs of one small sector of the economy and to even increase that percentage further to match other jurisdictions every time they sweeten the pot is also ludicrous.

I ask those who support the tax credit subsidies if they would put any limit on them? $500 million a year? $1 billion?

Make the tax credit 50% and we'd get even more work - temporarily and at an enormous cost per job.

The answer isn't to match all competing jurisdictions no matter what - we can't win a fight that never ends.

One additional note: I was unaware when this column was written of Premier Christy Clark's plan to spend a ridiculous $11 million on a one-time-only event for Bollywood awards in Vancouver - and I completely oppose it.

Not only is it a crazy and crass waste of money right before an election but it is an insult at a time when the BC film industry needs thoughtful solutions.

A tax credit does not mean paying taxpayers' money to the film industry!!It simply means that the Filmmakers will pay less tax!!

If they don't film here, they will pay NO tax, and the spin-offs from the business - like HST taxable moneys spent in BC - will never make it into our provincial kitty. Less money for caterers, restaurants, hotels, and on and on....

A tax credit may be a subsidy, but it does not entail taking money out of the provincial coffers. What it does mean is requiring less in taxes from the film industry. But this is more than offset by the taxable moneys spent in BC - for caterers (who will be taxed in BC) restaurants, hotels, income taxes, HST and on and on. It's extremely short sighted, no matter how much you rationalise it, to drive an industry that is worth so much in loonies and nickels out of the province and back to, say, Ontario or LA.

Why do do you suppose those other jurisdictions are so willing to do what we are not? Because they know howvaluable it is to have films made there. It's not about overpaid movie stars; it's about adding value to a province known mostly for being a hewer of wood and a drawer of water.

Bailing out private enterprise by governments is just plain wrong. That goes for all industries, including oil, gas, banks, everyone. Cherrypicking faltering businesses is not fair. All or none. I prefer none. Bailing out industries takes the "free" outof free enterprise and adds billions to our debtload. Anything else is "socialism"!!! Now where did I hear that word before???

Confirmation bias, (remember Psych 101) seems to prevent people from understanding that film tax credits is not taxpayers money, it's a refund. The information is out there if you can but ideology aside and become fully versed. But that aside the workers at the firms below do not have a tax credit 'scheme':

All these tax subsidies result in less money coming into the provincial coffers. It contriubtes to the high deficiet B.C. has. The question becomes, is it more important to give tax credits to foreign corporations or tax them and keep the deficient lower. When the government runs out of money they cut health care, education, etc. So is the tax break to the film industry or any industry worth it.

What are the societal repercussions of another couple of thousand unemployed in B.C. Do the taxes they pay make up for the susidies the film companies receive. A cost anaylisis might be in order here.

I am tired of seeing foreign corporations and Canadian corporations getting huge tax execptios, subsidies, etc. while we the wage earner don't receive much of a break at all. We have less money coming into the provincial coffers while large profitable corporations get tax write offs. So who benefits most? Right now it looks like a big company and I have to make up the differance.

It is about time governments stopped with the corporate welfare routine. In the end these multinational corporations leave town anyhow. Corporations are global and they take their money where ever they think they can make the most. There is no need to impoverish the children of B.C. so some company can make more money.

I posted a comment on that article at the globe site and as usual received no answer to a couple of my questions included in the comment. One of them was a request for Ms. Lederman to confirm a source for a side comment about the HST, a subject that is, of course, dear to Bill's heart. No reply to date.

I wish that there was more of a debate about the quality of the art that is produced by various support programs (tax breaks, grants, CBC) rather than simply economics. You have some pretty good film makers in BC (Carl Besai, Julia Kwan, Mina Shum, ex-Edmontonian Anne Wheeler come to mind as a start) but they seem to be either not working or pumping out forgettable TV episodes.

Regardless of whether it's called a subsidy, a credit or an incentive, it means that one sector of the economy is receiving favoured treatment by not having to pay as much to do business here as any other sector. The arguments advanced in favour of the film industry could equally be made of any other one: "[insert preferred recipient of subsidy/credit/incentive here - eg, forestry, teachers, airlines, restaurants, etc] hire(s) lots of local people, who pay taxes and contribute to their community. If they don't get this subsidy, they'll stop working and the province won't get any income tax from them." Of course any business will increase if their costs drop. The key question is why we prefer to encourage the film industry to any other. If the film industry doesn't like our wage structure, our workers will seek other alternatives. It's not film or nothing, it's film or each person's next best choice. If film leaves, maybe people will start making more furniture, making more artwork, doing more farming, writing more software, doing more banking - whatever. Whatever they choose to do, they will then pay income tax on their earnings and the companies that hire them will pay regular corporate tax. I don't see any need to favour film over anything else - people in BC have all the options in the world of what kinds of jobs to pursue.

Bill Tieleman and Senator Larry Campbell, former Vancouver mayor

Jim Sinclair, Cindy Oliver, Ken Georgetti and Bill Tieleman

Bill Tieleman's coverage of the Basi-Virk/BC Legislature Raid Case praised by other journalists:

"This outstanding piece of journalism, in The Tyee, is the work of a journalist who has been deeply involved with this issue from the start and this article should be passed on as far and wide as possible."

"Bill Tieleman from 24 hours . . . . If you want to know about this trial and about this case, you have to read his blog – I mean, that’s just all there is to it – it’s required reading if you want to understand the BC Legislature Raid situation."

- Mike Smyth, columnist, The Province

"The Basi-Virk case....you’ve probably sat through more of these hearings and gone through more of the files and written about it than any other journalist in the province."

- Bill Good, host, The Bill Good Show, CKNW/Corus Radio Network

"Tieleman ...has done a first-rate job covering the trial."

- Paul Willcocks, columnist, the Victoria Times-Colonist

"Tieleman, who marries a considerable journalistic talent with one of the smartest political minds in the province, has been writing more web-exclusive material. And his coverage of the Basi-Virk trial is a must-read -- whether you're an insider or an outsider."

"24 Hours, the Vancouver paper that has been leading the coverage, as well as the hints of conspiracy in B.C."

- Norman Spector, columnist, Globe and Mail

"Although the major media in this circumstance has been giving the case significant coverage, Tieleman's reports on his blog have been outstanding.

The entire cut and thrust of legal wrangling and arguments has been covered and is accompanied by considered analysis.....His blog site coverage of the Basi-Virk trial is the most in depth treatment of one of British Columbia's biggest political scandals."

- Bill Bell, columnist, The North Shore News

"Mr. Tieleman has published online dispatches which, freed from the limitations of newsprint space or broadcast time, can run at length. They also remain available for those select readers who become obsessed with a case also known as Railgate.....

In another bizarre twist to a story with no shortage of them, Mr. Tieleman went to work one day in December only to discover his office had been ransacked. Bookcases had been tipped over and papers strewn, but nothing was missing.

To top it off, a press kit for the self-published novel The Raid, written by a retired military officer in Metchosin and featuring on its cover a photograph from the 2003 police raid, had been left in a conspicuous place."

- Tom Hawthorn, columnist, The Globe and Mail

Nobody has followed the Basi-Virk affair over its past five years with greater diligence than local journalist, Bill Tieleman....Tieleman deserves our thanks, a fistful of journalism awards and some merit citation for citizenship.